U.S. legislators push Puerto Rico fixes as governor visits capital

Reuters News
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Posted: Dec 09, 2015 2:08 PM

(Reuters) - The financial fate of Puerto Rico may be gaining traction in Washington, with members of both parties on Wednesday pushing legislation to address the island's debilitating fiscal crisis as Governor Alejandro Garcia Padilla urge legislative action.

Puerto Rico, an island of 3.5 million hamstrung by a 45 percent poverty rate and $72 billion in debt, narrowly avoided default last week, but faces $332 million of constitutionally guaranteed debt due on January 1.

Democratic Senator Charles Schumer of New York, speaking on the Senate floor, tried to bring to a vote a bill to extend to Puerto Rico a law that allows U.S. states to put struggling municipal entities into bankruptcy.

"It won't cost the taxpayer one plugged nickel," Schumer said.

Utah Republican Orrin Hatch, who chairs the Senate committee with oversight of Puerto Rico legislation, blocked Schumer, saying he was preparing to introduce his own version of the bill later in the day.

Connecticut Democrat Richard Blumenthal said he, too, would speak on the Senate floor on Wednesday to urge immediate legislative action.

Treasury Secretary counselor Antonio Weiss on Wednesday argued in a speech in Washington, D.C. that the island was already in crisis and needed access to a federally legislated restructuring regime.

The Treasury in October urged Congress to provide tools for Puerto Rico to restructure its liabilities, increase Medicaid support and boost economic growth through tax credits.

Garcia Padilla has said that to pay its debt, and keep providing essential services, Puerto Rico must default on other bonds.

At a news conference on Wednesday in Washington, D.C., Garcia Padilla said he was meeting with Congressmen, as well as leaders from the U.S. Treasury, which itself has urged Congress to pass even broader legislation than that pushed by Schumer, giving Puerto Rico as a whole the right to file for bankruptcy.

The governor has faced obstacles at every turn in his efforts to right the ship. Creditors have been resistant to repayment cuts, while laws prevent Puerto Rico from enforcing cuts through bankruptcy. Help from Washington has seemed unlikely in a gridlocked U.S. Congress.

The island faces $120 million in December bonus payments for public workers, which Garcia Padilla said on Wednesday is a requirement under the law. "I have to do everything in my power to pay that money," he said.

(This version of the story corrects title of Antonio Weiss in paragraph 7 to Treasury Secretary counselor.)

(Reporting by Nick Brown in San Juan and Richard Cowan in Washington; additional reporting by Megan Davies in New York; Writing by Nick Brown; Editing by Alan Crosby and Frances Kerry)